The United Nations (UN) has issued a warning that Tether, one of the world’s largest cryptocurrency platforms, has become a prominent choice for money launderers and fraudsters operating in Southeast Asia. A report from the UN’s office on drugs and crime, released on Monday, highlights Tether’s crypto token as a key component in an escalating trend of scams, including schemes that exploit false romantic connections to gain victims’ trust before coaxing them into transferring substantial sums, commonly known as “pig butchering.”
The report notes law enforcement and financial intelligence authorities reporting a rapid increase in the use of sophisticated, high-speed money laundering involving Tether. The UN report sheds light on the use of online gambling platforms, particularly those operating illegally, as favored vehicles for cryptocurrency-based money laundering, with Tether being the cryptocurrency of choice.
Tether’s digital token, a stablecoin pegged to the US dollar, allows for swift and irreversible transactions on the blockchain, making it attractive to criminals engaged in illicit activities. The report underlines that the evolution of cryptocurrency, coupled with technological advancements, has amplified the practice of using black-market casinos to launder illicit funds by organized crime groups in Southeast Asia.
Despite several money laundering networks being dismantled in recent years, authorities have highlighted the challenges posed by the loosely or entirely unregulated online casinos and cryptocurrency in the region. Tether, with a circulating supply of roughly $95 billion, has faced scrutiny, and authorities have taken action against operations moving illicit funds involving the stablecoin.
The report points out a joint investigation between Tether, US authorities, and crypto exchange OKX, which led to the freezing of $225 million worth of Tether tokens connected to a “pig butchering” and human trafficking syndicate in Southeast Asia. The appeal of Tether for criminals lies in its rapid and irreversible transactions, creating a situation where victims are lured by promises of love and quick wealth.
The UN report also notes the regulatory lag in cryptocurrency, providing organized crime groups with opportunities to exploit vulnerabilities and weaknesses. Despite enforcement crackdowns in the US and elsewhere, Tether continues to be embraced by criminal groups, with some casinos even specializing in handling the token.
The report concludes by highlighting a money laundering syndicate in Shan State, Myanmar, operating in Cambodia, advertising Tether on a busy street and promising to exchange “black” tokens for cash. Tether has not responded to requests for comment, and despite efforts to prevent illicit use, the number of blacklisted Tether wallets has surged, indicating ongoing challenges in tackling criminal activities involving the stablecoin. Tether has previously faced regulatory scrutiny over its asset management and ties with financial institutions, including a $41 million fine from the Commodity Futures Trading Commission in 2021.
